The markets are not looking all that good for Facebook Inc (NASDAQ:FB) according to Fast Money traders, who have inclined on it, a tepid outlook. The social media giant posted strong quarterly numbers in terms of revenue growth, which achieved a 56%, thanks to the more than 200monthly users. The income stood at $7.01 billion, up from the $4.5 billion it reported for the same period last year. However, the company stock went south with a plunge of 8%.
Facebook’s CFO David Wehner talked about a decline in the ad revenue growth rates during the fourth quarter, which occasioned the fall in total income and fees growth rates. Surprisingly, we went ahead to outline the likelihood of the company having to embrace tougher comparables and a permanent decline in Facebook ad growth.
There is much more of the “bad news”
As CEO Mark Zuckerberg talked big of how much the company had made and about the 1.79 monthly users that the business has obtained by the end of September, Wehner was busy letting out more shockingly “bad news.” He said that Facebook would remain competitive but the capital spending hitting $4.5 billion in the current quarter. However, this would translate to the overall expenses going higher by 30%.
But how possible would this be given that Facebook’s current quarter is already giving a different look of how the company will report on its restricted stock grant and option programs? Apparently, lucrative stock option programs are what a majority of Silicon Valley companies use to attract top talent without necessarily having to spend so much on compensation.
Slow growth warning
The world’s largest social media network earlier warned about an expected slow growth. On the other hand, analysts say that the non-voting shares that Zuckerberg may have issued in an effort to restructure Facebook may not have much of a tradable market. Employees will not be able to offload some shares so as to pay the federal and state taxes due.
Nonetheless, the analysts were taken aback by Wehner statement that Facebook was likely to be subject to a $1.8 billion tax bill, given its anticipation of a quarterly share-based compensation of about $3.2 billion. That said, it may have to cover up a 45% in the net tax rate.
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